Donore Garages & Anor v Tennant

Factual and Procedural Background

These proceedings concern two related cases involving the Plaintiffs and the Defendant. The first proceeding involves the Plaintiffs seeking injunctions to restrain the Defendant, acting as receiver, from entering and interfering with the premises located at 50 Patrick Street (including 31 and 31A Kevin's Street), collecting rent, and otherwise disturbing the Plaintiffs' quiet enjoyment of the property. The second proceeding, consolidated with the first, involves the Plaintiffs seeking specific performance of an alleged contract relating to the premises or damages against Company B, the lender.

The Plaintiffs filed a motion seeking multiple injunctions to prevent the Defendant from selling, marketing, or taking possession of the premises, as well as a declaration that the Defendant was improperly appointed as receiver. Conversely, the Defendant, as receiver, sought interlocutory injunctions compelling the Plaintiffs to surrender vacant possession, restraining them from interfering with the Defendant's functions, and requiring delivery of keys, records, and accounts related to the property.

The dispute centers on the validity of the Defendant's appointment as receiver and whether the Plaintiffs have a binding agreement with the original lender, Bank of Scotland, to buy out their loans at agreed discounted prices. The Plaintiffs have purchased ten of eleven properties but have failed to pay a final outstanding amount of €285,000 necessary to release security on the upper floors of the premises.

The premises include Nash’s pub and upper floor properties, originally acquired by Company B and subject to a long lease from Dublin City Council. The Plaintiffs mortgaged the upper floors to the bank, and the bank held a mortgage over Nash’s pub. The bank appointed a receiver over certain assets in 2010. Negotiations took place between 2013 and 2015 for a discounted settlement of €2.1 million to release security over eleven properties, including the premises at issue.

The Plaintiffs contend that a binding agreement to buy out the loans remains in effect but acknowledge the delay in paying the outstanding sum is due to title deficiencies, which were rectified in August 2016. The Defendant disputes the existence of any ongoing binding agreement and challenges the Plaintiffs’ claims.

Legal Issues Presented

1. Whether the Defendant was duly appointed as receiver over the premises.
2. Whether the Plaintiffs have a bona fide and enforceable agreement with the original lender to buy out the loans, preventing the Defendant from exercising receiver powers.
3. Whether the Plaintiffs are entitled to interlocutory injunctions restraining the Defendant’s actions regarding the premises.
4. Whether the Defendant is entitled to interlocutory relief compelling possession and restraining the Plaintiffs from interfering with his functions as receiver.
5. Whether the lis pendens registered by the Plaintiffs should be vacated on the grounds of lack of bona fide prosecution or unreasonable delay.

Arguments of the Parties

Plaintiffs' Arguments

• The Defendant was improperly appointed as receiver.
• The Plaintiffs have a binding agreement with the original lender to buy out the loans at discounted prices, which should prevent the Defendant from exercising receiver powers over the premises.
• The delay in paying the outstanding €285,000 is due to title deficiencies outside their control, which have since been rectified.
• The Plaintiffs seek multiple injunctions to prevent the Defendant from entering, interfering with tenants, collecting rent, or selling the premises.

Defendant's Arguments

• The Defendant was duly appointed as receiver, supported by evidence including a duly executed loan transfer deed.
• The Plaintiffs’ claimed agreement with the original lender had expired and was conditional on prompt payment, which was not met.
• The Plaintiffs have failed to pay the outstanding sum within the deadlines set by the lender, and the Defendant is entitled to exercise his powers as receiver.
• The lis pendens registered by the Plaintiffs is improper and should be vacated as the Plaintiffs’ claim is not bona fide and is likely to fail.
• The Defendant seeks interlocutory injunctions to secure possession, prevent interference, and enable the marketing and sale of the premises.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the evidence regarding the Defendant’s appointment as receiver and found prima facie evidence of valid appointment, including a duly executed loan transfer deed. The Plaintiffs’ challenge based on alleged improper appointment was not supported at interlocutory stage.

Regarding the Plaintiffs’ claim of a binding agreement to buy out loans, the court examined correspondence showing the lender’s insistence on prompt payment by specified deadlines and conditional acceptance of discounted settlement. The Plaintiffs failed to meet these deadlines, and the lender had withdrawn any concession, effectively terminating the agreement. The court found no fair issue to be tried on this point.

The court applied the well-established interlocutory injunction test from Campus Oil (No. 2), considering whether damages would be adequate and the balance of convenience. It concluded that damages would be an adequate remedy for the Plaintiffs, who had expressed willingness to see the property sold, and that the balance of convenience favored the Defendant’s ability to carry out his functions as receiver, including possession and sale of the premises.

On the issue of lis pendens, the court noted statutory provisions requiring bona fide prosecution of claims and absence of unreasonable delay. It found the Plaintiffs’ claims were not bona fide and likely to fail, and that lis pendens could not properly be registered against a receiver or lender without ownership interest. The court held the lis pendens should be vacated to avoid hampering the receiver’s duties.

The court also considered the mandatory nature of some relief sought by the Defendant and, despite the usual caution in granting mandatory injunctions at interlocutory stage, found it appropriate here to enable the receiver to perform his functions effectively pending final resolution.

Finally, the court found no credible evidence that the Defendant could not meet an undertaking as to damages, while the Plaintiffs did not provide evidence to the contrary.

Holding and Implications

The court REFUSED the Plaintiffs' application for interlocutory relief, including all their sought injunctions and declaration.

The court GRANTED the Defendant the interlocutory injunctions sought, including possession of the premises, restraint on the Plaintiffs from interference, delivery of keys and records, accounting for rents, and marketing and sale of the property.

The court ordered the lis pendens registered by the Plaintiffs to be vacated on the grounds that the Plaintiffs were not bona fide prosecuting their claim and had no valid interest in the property to justify such registration.

The decision allows the Defendant, as receiver, to carry out his duties regarding the premises without obstruction and facilitates the sale of the property pending the final trial. No new legal precedent was established; the ruling applies established principles to the facts of this case.